With fears of a fiscal cliff running high and the chances of a
Thanksgiving rally diminishing by the day, investors looking to
stay involved in stocks might want to seek comfort in the largest
of the large caps. Or mega caps, as stocks with market values of
over $100 billion are so often called.
Indeed, mega caps have already been endorsed as an ideal with
to find shelter from the brewing fiscal cliff
. The theory being that higher beta mid and small cap issues
could languish as investor seek more conservative
There is an interesting scenario pertaining to the largest
stocks. While many, if not all are household names such as Apple
), Exxon Mobil (NYSE:
) and General Electric (NYSE:
), not all of the
that focus on these types of stocks are as widely known as their
Popular holdings may not make for a popular ETF, but these
unheralded mega-cap plays might be worthy of consideration in
turbulent market environments.
PowerShares Active Mega Cap Fund (NYSE:
The PowerShares Active Mega Cap Fund is not only anonymous among
mega-cap funds, it is also overlooked among actively manged ETFs.
Still, the concept here is unique. PMA's constituents are
selected based on earnings momentum, price trend, management
action and relative value. Each stock is evaluated for risk using
at least 17 variables,
according to PowerShares
PMA is split almost evenly between large-cap growth and
large-cap value names with technology and financial services
names combining for over 51 percent of the fund's weight. Top
holdings include Exxon Mobil, Cisco (NASDAQ:
), Amgen (NASDAQ:
) and Apple.
PMA is somewhat pricey with an annual expense ratio of 0.75
percent, but in its favor, the fund has gained 7.63 percent
SPDR Global Dow ETF (NYSE:
Home to nearly 170 stocks, DGT lives up to its name and takes a
more global approach to its lineup. Of the ETF's top-10 holdings,
just one, Amgen, is a U.S.-based company. Overall, the U.S.
accounts for 42.2 of DGT's country weight. Including the U.S.,
DGT offers exposure to 23 countries, including developed and
DGT has gained just over five percent this year, but valuation
aficionados will like this ETF. With a price-to-earnings ratio of
11.53, DGT is slightly cheaper on that basis than the SPDR
S&P 500 (NYSE:
). The two funds have identical price-to-book ratios of two.
Vanguard Mega Cap Value 300 ETF (NYSE:
Rare is the low-cost broad market Vanguard ETF that flies under
the radar, but that is what the Vanguard Mega Cap Value 300 ETF
does. That is not criticism. Of the ETFs highlighted here, MGV is
by far the best performer this year with a gain of almost 9.3
percent. It is also by far the cheapest with fees of just 0.12
percent per year. In fact, that makes MGV cheaper than 90 percent
of comparable ETFs, according to Vanguard.
Nine of MGV's top-10 holdings are Dow components with
) being the exception. The ETF is also fairly diverse with its
holdings as the top 10 represent just 37.2 percent of the fund's
A potential knock on MGV is that may not as conservative as
investors expect. Combined, financials and energy stocks
represent 41 percent of the fund's weight and those sectors
should be avoided under a fiscal cliff scenario.
For more on mega cap ETFs, click
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.